Exhibit 1 Current Far and Spot Rates l'r'laturityllr Par Rate Spot Rate One year 2.59% 2.59% Two vears 2.99% 3.199% Three years 3.48% 3.59% Four years 3.95% 4.% Five years 4.3?% Note: Par and spot rates are based on annual-coupon sovereign bonds. Nguyen gives Alexander two assignments that involve researching various questions: Assignment 1 What is the yield to maturity,r of the option-free, default risk- free bond presented in Exhibit 2? Assume that the bond is held to maturity. and use the rates shown in Exhibit 1